5 Fatal Mistakes We All Make That Drive Down Our Credit Scores

If you're looking to refinance, get a new mortgage, or save on your existing monthly payments, then high credit scores matter. What's even more important is that you keep them high and avoid any pitfalls that can cause your credit score to drop.

Here are five of the most common mistakes people make in thinking they can get away with mediocre credit decisions.

1) Paying late

This is the most common mistake and one of the easiest to avoid. Know your payment due date and make sure you pay it early enough to ensure it will arrive on time. If you're tight on cash and have a choice between paying bills or taking care of yourself, pay your bills first and then pay yourself if there's anything left over.

2) Failing to check your credit report

You are legally entitled one free report per year from each of the three major reporting agencies (CRAs). You should take advantage of this right and make one courtesy request a year. Your report might contain errors that could be damaging in the long run. If you have any questions, contact the CRA to verify the information.

3) Ignoring your credit score

Many people don't even know their credit scores. Make sure you're not in that group and find out what your scores are on a regular basis. If they dip below a certain level, it's time to find out why and correct the problem before it gets any worse.

3) Not paying off old debt

It's probably in your best interest to pay off old debt if possible, but don't do so if it puts you at risk of bankruptcy or other financial ruin. Remember that new loans will be based on your current credit standing which means you aren't building or rebuilding your credit with payments like these.

4) Failing to keep up with recent changes in the credit system

Whether it's a new credit card, offer of a term loan, or switch of your mortgage, take note of what is happening and how it will affect you. Some lenders might place a lower limit on your credit due to previous late payments or other negative information. Others, such as home equity lines of credit (HELOCs), will also adjust their interest rates based on the status of your credit scores.

5) Making assumptions about your scores

Many people who find themselves in trouble don't even realize it and fail to protect their good standing until too late. If you're headed for trouble, check your scores regularly to make sure the problem isn't already apparent.

Source: http://www.financemagnates.com/debt-management/5-fatal-mistakes-all-make/#sthash.4g4lOELo.dpuf

It's not uncommon for mortgage companies and other lenders to check your credit report to determine if you are a good candidate for a loan. A credit score is usually checked even before that, sometimes as the first step. High scores mean you're considered less risky and they help prove that you've been responsible with your finances in the past. Low scores, on the other hand, can cause you a lot of problems in your attempt to get approved for a loan or any other type of finance application. Even if your score doesn't put you in serious trouble, it can still affect your chances of getting approved for some loans and other types of financing. Take a look at this infographic to learn more about the common mistakes that are usually made by financial misfits who fail to look at their credit score.

Source: http://financemagnates.com/credit-score/common-mistakes-invoices/

We're going to take a closer look at the five most common mistakes that people make when it comes to credit repair. If you don't want the same thing to happen in your situation, you need to know how long your score is likely to stay below perfect and what you can do about it.

1) Scoring too low by closing accounts - There are three main reasons for this, but their effects are similar. Keeping around a dozen or so accounts open will ensure that your credit score stays high for years. Closing accounts below that number and keeping them closed for long periods of time will cause your score to fall between 250 and 850 points, depending on what accounts are shut down.

2) Reporting too many negative items - When your credit report is scanned by lenders or service providers, they don't consider all the negative items to be equal. Some of these can have a greater effect than others, but the ones that hurt you most tend to be late payments and bankruptcy. You don't want to close credit accounts to get rid of potential negative information, but it's important that you remove those items and keep them off your report.

3) Opening too many new accounts - This can be a good idea for those just learning how to keep their scores high, but it puts you at risk. At some point, your scores will start dropping as a result of the new accounts and the checking and savings account you opened with them might be one of them. Never close an account if it's on your credit report; leave it open even if it's not active.

4) Not using your credit cards correctly - No matter how you use them, if your cards are approved, they'll get reported to the credit bureaus. When that happens, you'll need to make sure that you're using it the right way. After all, using it right is what will get the most out of your money and help you become a more responsible person in the financial sphere.

5) Paying bills late - Failing to pay bills on time can cause some significant damage and is why many people believe their scores are low when they're not. You just need to keep records of each payment as well as its due date.

Source: http://www.myfico.com/MyFICO/Credit-repair/The-5-Most-Common-Credit-Repair-Mistakes

Let's take a look at what you need to keep in mind when you're about to get into a credit card or any other type of debt for that matter. There are some things you can do to keep your score high and others that you should avoid. The good news is there are lots of products available for this, making it easier than ever for people who struggle with their scores to get the help they need to watch out for their financial health.

Conclusion

You can use this infographic on common credit mistakes to remind yourself of the things that might hurt you the most. It's important to keep these in mind when it's time to start applying for loans or taking out new credit cards. If you find yourself making any of these mistakes, take steps to correct yourself as soon as possible. Don't miss out on the chance to make your life better by keeping your scores high and making sure they stay that way. Source: http://www.visualcapitalist.com/common-credit-mistakes/

In order to avoid some of these problems and make your credit score better, you'll need to learn how long does it take for a bad debt to disappear from my credit report .